The US government has targeted another major online gaming site and seized its …

As the result of a long-running investigation that dates back to at least 2006, the US Attorney’s Office for the District of Maryland unsealed on February 27 a two-count indictment against Bodog Entertainment Group and four Canadian individuals for allegedly (1) conducting an online sports betting business in violation of the Illegal Gambling Business Act and (2) engaging in a money laundering conspiracy since 2005. According to the indictment, the defendants moved money from accounts in Switzerland, England, Malta, and Canada to accounts in the United States in order to pay advertising firms. The indictment also alleges that the defendants paid $42 million to an unidentified “media reseller” in the United States between 2005 and 2008 in order to promote Bodog.

If found guilty, the individual defendants can be imprisoned for as many as twenty years on the money-laundering count and five years for the illegal gambling business. In addition, Bodog Entertainment Group could be fined up to $1 million.

Seizure

Although a grand jury returned the indictment on February 22, the government kept the document sealed in order to pursue its separate suit to seize the bodog.com domain name. In that separate action for civil forfeiture (the aptly named U.S. v. Bodog.com Internet Domain Name), the US Attorney’s Office for the District of Maryland won the seizure of Bodog’s main domain name, which was registered with Verisign, which exerts final control over all ".com" names.

According to the seizure warrant filed on February 27, Verisign must “take all steps necessary to restrain and lock the domain at the registry level to ensure that changes to the subject domain name cannot be made” without government approval.

EasyDNS notes that bodog.com was actually registered to a Canadian company called domainclip, but because Verisign has top-level control over all .com names, that didn't matter. The government "simply issued a warrant to .com operator Verisign, (who is headquartered in California) who then duly updated the rootzone for .com with two new NS records for bodog.com which now redirect the domain to the takedown page," wrote EasyDNS's Mark Jeftovic, who also called for ICANN to step in to the domain takedown battle.

An affidavit in support of the seizure warrant reveals further details regarding the government’s investigation of Bodog, including:

A government agent set up a gambling account on bodog.com as far back as 2006. After identifying his address as being within Maryland, the agent then made winning sporting bets and received his earnings via the mail in 2007. Another government agent used ewalletexpress (an online payment processor that no longer accepts payment from the US) in 2009 to place bets on bodog.com and to receive payments in Maryland.

The IRS was involved. One of the government agents who investigated bodog.com was from the IRS, and a government press release stated that “Internet gambling, along with other types of illegal e-commerce, is an area of great interest to IRS Criminal Investigation.”

An ex-employee of Bodog told the government that the company “has hundreds of employees, located in Canada and Costa Rica, who handle the day-to-day operations of taking bets, tracking sports events” and “many other of the normal functions of running an online internet gambling site.”

No sports betting, please

The government’s actions raise many questions. First, why the delay? The investigation has been long-running, and it’s unclear why the government waited several years to bring charges. It’s also unclear why Bodog wasn’t part of the Black Friday crackdown on online gaming sites back in April 2011.

Second, although Bodog offers a wide range of online gaming (including poker), the government’s indictment and civil forfeiture complaint focused on Bodog’s sports betting. The Illegal Gambling Business Act used by the government requires, as a predicate, an act that is unlawful under state law. To satisfy that requirement, the government cited a section of the Maryland criminal code that broadly prohibits a “bet, wager, or gamble.” The government’s focus on Bodog’s sports-betting business may signal that the US Department of Justice is distinguishing among different types of online gaming—particularly in light of the Office of Legal Counsel’s recent opinion suggesting that online poker did not actually run afoul of the Wire Act.

Calvin Ayre, who founded Bodog, took to his personal site to complain. "I see this as abuse of the US criminal justice system for the commercial gain of large US corporations," he said. "It is clear that the online gaming industry is legal under international law and in the case of these documents is it also clear that the rule of law was not allowed to slow down a rush to try to win the war of public opinion."